Value of Wind Turbine Site

Discussion in 'Green Business' started by roydmoorian, Jan 28, 2014.

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  1. roydmoorian

    roydmoorian UKBF Ace Full Member - Verified Business

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    If the revenue over the 20 year life of the project (all planning & DNO (Grid Connection)paid for) will be £2m what would the value of the site be ?

    5% = £100k or less ? or more ?

    Does anyone have a ballpark figure [​IMG]
     
    Posted: Jan 28, 2014 By: roydmoorian Member since: Nov 6, 2009
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  2. vvaannmmaann

    vvaannmmaann UKBF Legend Free Member

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  3. Psl

    Psl UKBF Ace Free Member

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    It all depends on what the seller will accept and what the buyer is prepared to pay based on the turbine installed and the figures going forward, which you have obviously worked out - hence the £2m. There are a number of investment funds, private energy companies etc that will look at installed and generating sites. Is the site you are talking about built out and generating?
     
    Posted: Feb 10, 2014 By: Psl Member since: May 4, 2010
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  4. energypriced.com

    energypriced.com UKBF Newcomer Free Member

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    I might be a bit late in this conversation but here's my experience with medium scale wind sites:

    Most developers will not buy the land but instead lease it from the owner during the 20 year project lifespan. This lease payment is usually somewhere between 5-10% of the project's gross annual revenue (a better wind resource can attract a higher percentage because there is more cash flow available).

    The developer will likely be looking for an IRR of at least 12-15% (the higher the better) therefore, if you know the costs to develop the site you may be able to workout the developer's 20 year IRR model and play with the lease cost (or purchase cost) until you arrive at an attractive IRR for the developer.

    Assuming the figure £2 million has not been discounted and represents an annual net revenue of £100,000 per year you are probably looking at a 100kw - 300kw turbine which will cost around £500,000 to construct. If you put this capital cost into an online IRR calculator (or your own excel one) with incoming cashflow of £100,000 per year. The IRR is roughly 19% (depending on other factors such as debt cost). You can increase the capital cost to £650,000 and still get an attractive IRR (14.3%).

    So selling your land for £150,000 would seem like a ballpark estimate but it depends on the developer's cost of financing and the actual project costs.
     
    Posted: Apr 25, 2014 By: energypriced.com Member since: Apr 4, 2014
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  5. vvaannmmaann

    vvaannmmaann UKBF Legend Free Member

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    Posted: Apr 30, 2014 By: vvaannmmaann Member since: Nov 6, 2007
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  6. The Byre

    The Byre UKBF Legend Full Member

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    1. The opposition to wind farms is vehement and very effective. Dealing with that opposition increases start-up costs considerably.

    2. Operation costs are turning out to be far higher in the long run, particularly maintenance costs.

    3. Political risks (e.g. feed-in tariff cancelled, over-production penalties introduced) are increasing.

    4. Start-up times (and therefore costs) are increasing.

    5. More demands and obligations are being made on wind-farms for such things as road improvements, contingency insurance, payments to local communities.

    For all the above reasons, wind farms are no longer the license to print money that some people used to think they were. Also, if you stick a few million in Ford common stock, nobody pickets your head office or even your home address - and recently, you would have earned more as well!
     
    Posted: Jun 5, 2014 By: The Byre Member since: Aug 13, 2013
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